Beating a Part 36 Liability Offer: A Right to An ‘Additional Amount’?

Rule 36.2(5) CPR expressly provides that a Part 36 offer may relate solely to liability. So a defendant’s Part 36 split-liability offer is an offer which relates to the whole claim, and the claimant’s acceptance of it automatically entitles her to her liability costs by virtue of rule 36.10(1): Onay v Brown [2010] Costs LR 29. Onay was applied by Stadlen J in Sutherland v Turnbull [2010] EWHC 2699 (QB), in which I appeared for the claimant. She too was held automatically entitled to her costs after accepting the defendant’s Part 36 offer to pay 30% of the damages due for certain of her injuries only.

So far, so straightforward. And if a claimant beats her own Part 36 offer, rule 36.14(3) presumptively entitles her (‘unless unjust’), from the date of expiry of her offer, to extra interest, indemnity costs and interest on those costs; and, as of 1 April 2013, to an ‘additional amount’. That amount is 10% of the first £500,000 of ‘the sum awarded to the claimant by the court’ and 5% of the next £500,000, subject to a cap of £75,000. This is intended to increase the penalty on a defendant who fails to accept a well-judged claimant’s offer, in line with Jackson LJ’s Final Report.

There have been several instances of trial judges awarding an ‘additional amount’. A notable example is Daniel Lawson’s case of Malvicini v Ealing PCT [2014] EWHC 378 (QB), a decision of Robert Francis QC; regrettably, the approved judgment does not include the ‘additional amount’ or the other rule 36.14(3) rulings. What remains a live question, however, is whether a claimant is entitled to an ‘additional amount’ if she beats her own liability-only offer. By application of rule 36.2(5) and Onay, the answer is Yes. By application of the strict wording of rule 36.14(3)(d), the answer is No, because there is as yet no ‘sum awarded to the claimant by the court’.

If Yes, the successful claimant could potentially get two ‘additional amounts’ – one when she beats her own liability offer and another when she beats her own quantum offer. But why shouldn’t she? Why, putting it the other way around, should the unreasonable defendant not be penalised twice for twice-over unreasonableness? The practical difficulty of not having ‘a sum awarded’ at the liability stage could simply be met by the liability trial judge deferring the assessment of the ‘additional amount’ to the conclusion of quantum (by trial or, more likely, settlement). At that final stage, the defendant would be free to argue about the overall burden of the double-whammy.

A sub-committee of the Civil Procedure Rule Committee has apparently been established to consider ways of simplifying Part 36. I shall be writing to them to ask for appropriate amendment of rule 36.14(3)(d) as regards liability-only offers.

By Joel Donovan QC